.
.
Rational selection of equity and bond mutual funds and ETFs - An Overview
Given the extremely large variety and number of available fixed income and equity investment mutual funds and ETFs, investors need a rational basis to select among them. Without scientific selection criteria and a good understanding of which factors are more or less likely to increase risk-adjusted returns, investors will make erroneous decisions based on false assumptions.
Most individual investors want to select bond and equity mutual funds and exchange-traded funds (ETFs) to hold for a long duration.
Many would also like to invest additional amounts automatically into these funds over time and not to have to monitor them frequently. These investors are less concerned about short-term fluctuations than about their longer-term capital appreciation goals. In addition, of course, they hope to choose mutual funds and ETFs with exceptional performance and to avoid funds that consistently trail the pack.
Such investors want to use mutual screening or selection criteria to identify better funds and to minimize the need for frequent changes due to inferior performance. Individual investors are better served, if they understand what the scientific investment literature says about potential selection criteria.
These articles discuss valid fund screening and selection criteria:
- Avoid mutual funds and ETFs with sales commissions and 12b-1 fees
- Choose mutual funds and ETFs with lower investment management expenses
- Avoid mutual funds with higher investment portfolio turnover
- Avoid very large actively managed mutual funds
- Choose sufficiently mature mutual funds and ETFs
- Choose mutual funds with a minimum economical portfolio size
- Evaluate historical investment performance, but only after using other investment screening criteria
To implement these investment fund selection criteria, you need on-line fund screening applications supported with up-to-date data.
The Skilled Investor has also provided overviews of some investment fund screening applications and databases that are available on the web.
Many of these selection criteria are associated with investment costs, which are a dominant issue in efficient personal investment management. Click here for more articles on investment costs: Controlling Investment Costs
Bookmark on Your Favorite Service:
These icons link to social bookmarking sites where readers can share and discover new web pages.
Tags:
capital appreciation,
equity investment,
ETFs,
exchange traded funds,
fund screening,
fund selection,
Individual Investors,
investment performance,
mutual funds,
portfolio size,
portfolio turnover,
sales commissions,
screening criteria
.
If you like
this article, please consider subscribing to our full text RSS feed.
You can also subscribe via email, and new posts
will be sent directly to your inbox.
.
.
READERS FAVORITES: Our Top 30 Articles for You to Read
The Optimal Investment Strategy for Individual InvestorsDefault under the Citibank Credit Card ContractThe Top 25 Best Low Cost US Money Market Funds10 Lower Cost S and P 500 Index Mutual FundsTraditional IRA and 401k Versus Roth IRA and Roth 401k ContributionsPublish your blog news articles on traditional media center and newspaper websitesFactors Favoring Roth IRA and Roth 401k Plan ContributionsFactors Favoring Roth IRA and Roth 401k Plan Contributions - Part 2Rational Mutual Fund and ETF SelectionHow unstable have stock market returns been over time?Screening Index Mutual Funds with IndexUniverse.comAvoid High Turnover Mutual Funds and Active ETF TradingAnalyze Multiple Personal Financial Planning Decisions Simultaneously with VeriPlanOwn Investment Mutual Funds and ETFs - Not Individual SecuritiesFinancial Industry Product Development and Your Best InterestsMutual Fund and ETF Screening RequirementsDevelop Your Own Personal Financial Planning Skills - Step 1 of 10 Financial Planning Steps in the Right DirectionAlways Completely Diversify Your Investment PortfolioObjective Personal Finance Answers Are Hard to FindRational Mutual Fund and ETF Screening RulesThe Financial Services Industry is Still the Largest S&P 500 Sector - Even after the Collapse of its Stock ValuesMake More Optimal Tradeoffs Between Investment Risk and ReturnExcessive Investment Expenses Take 2% of Individual Investor Assets Every YearMost Individual Investors Are Poor Personal Portfolio ManagersAmerican Funds - The Investment Company of America - Class A Shares (AIVSX) net a +3 Fund Authority ScoreAmerican Funds - Washington Mutual Investors Fund - Class A Shares (AWSHX) acquire a +2 Fund Authority ScoreChoose Lower Mutual Fund and ETF Management FeesWhere's Waldo? - The illusion of superior professional mutual fund manager performance.March 5 2007 Edition of the Festival of StocksFee-Only Compensation Aligns the Interests of Clients and their Financial Advisors
.
Article comments
NOTICE: YOU MUST AGREE TO THE TERMS OF USE TO USE THIS WEBSITE.
These links will take you to our Terms of Use, our Privacy Policy
and our Copyright Policy.
This site is solely for informational and educational
purposes related to your personal, private, and non-commercial use.
- In no way does this site constitute or provide
investment advice under the laws and regulations of the United States of America and its various States or of any other country in the world.
- This site does not collect any specific information on the investment situation of any reader.
- This site does not render any advice on the basis of any readers' specific investment situation in accordance with the Investment Advisers Act of 1940, as amended.
- In no way does this site constitute a solicitation or offer to sell securities of any kind.
Copyright 2008 - Lawrence Russell and Company, All rights
reserved worldwide.
This site is financial publication of general and regular circulation. Except for reading and browsing via the World Wide Web, no part of this document or website
may be reproduced, modified, disseminated, published, adapted in any manner or transferred without permission in writing from Lawrence Russell and Company.
THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, FOR THIS WEBSITE, INCLUDING NO WARRANTY FOR MERCHANTABILITY AND NO WARRANTY FOR FITNESS FOR ANY PARTICULAR PURPOSE.
Unless otherwise stated, there are no business arrangements of any kind between The Skilled Investor and any mutual fund, ETF, or other investment security or any company that may be featured in our articles. We do not accept any payments to influence what we write about or what we say. The Skilled Investor does allow advertisers to post their messages on our site, and it is entirely your choice whether or not to patronize any of these advertisers.
"The Skilled Investor", "Skilled
Investor", "Fund Authority," "Fund Authority Score," "VeriPlan", "Personal Finance Software for Your Lifetime", "Your Personal Financial Lifecycle Planner",
and "Sensible and Scientific Financial and Investment Planning" are some of the trademarks of Lawrence Russell and Company. Other trademarks and service marks are the properties of their respective owners.
No comment yet